Fixing the Third Party Grading (TPG) Problem

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Um, and we don't have that now? Any two grading compaines may not necessarily agree on the grade for the same coin. Any 2 graders working for the same company might not. And anybody can put a coin in a piece of plastic and put whatever grade they want on it, and who's to say it's wrong, it's just one person's opinion anyway. All that's happened is people are relying on somebody else's supposedly expert opinions instead of learning how to spot good and bad coins themselves. The hobby was alive and well before the TPGs came along... sure there were crooks out there, but there still is... and the defense is to become an educated buyer.

The solution to the problems you mentioned before the existance of TPGs isn't TPGs, it's education. If dealers sell overgraded, docted, altered, and messed with coins, learn to spot them, and don't buy them. The TPGs came along and the same problems still exist, so what did they solve precisely? Other than bring along another thing for collectors and dealers to have to waste money on?

I have eyes, and I can read books, and can access online resources, and can learn enough about coins to see if the coin in front of me is worth buying or not. If I think the person selling it is asking too much for what I think it's worth, I just won't buy it. If I don't trust my own opinion, I can get the opinions of others for free (hear of the internet perhaps?). There's nothing I need a TPG to do for me that's worth paying for. If the internet came into exitance before 1986 TPGs might not even exist today, because there wouldn't be a need for them; the information you needed could be easily accessed for free or next to it. Well guess what, it exists now, the information is out there, easy to get access to, and there's not a thing any TPG can do for me that I can't do for myself for free.

Coin collecting has been around for centuries before TPGs even existed, and it can survive for centuries without them just fine.

Screw the TPGs, who needs them?

 

Let's see if I understand your position, Troodon.

All we as collectors need to do is to become as good at authenticating and grading coins as professional TPGs. That is much easier said than done.

To become truly good at coin grading and authentication one needs a lot of training and needs to grade many, many, many coins. An extensive reference library is needed for variety attribution and authentication. All this is a tall order for a novice or a casual collector.

You may change your tune if you buy a really, really good counterfeit or altered coin. I have seen some extremely deceptive counterfeit and altered coins. In the Counterfeit Detection course offered by the ANA we were allowed to inspect the largest collection of counterfeit and altered coins in the US. (This collection is part of the ANA collection.) Some of these coins are nearly impossible to detect if you don't know exactly what to look for. Do you feel comfortable enough with your skills to authenticate a $10,000 1911-D $2 1/2 Indian? I don't. And I have taken the class. I think paying a good TPG $50 to authenticate (and grade) and guarantee their findings is cheap insurance for a coin such as this.

Are your grading skills good enough to distinguish between EF-45 and AU-50 on a 1903-S Morgan dollar? (There is no pressure to get the grade right. CoinValues lists the coin at $400 in EF-40 and $2200 in AU-50.)

 

A coin's grade isn't engraved somewhere on the coin. Anybody's opinion on its grade is just that, an opinion. Is the opinion of a movie critic who has a degree in film and has seen several movies any better than the opinion of someone who has just seen one? No, because it is still just an opinion, and by definition all opinions are subjective.

Whehter a coin is authentic or not is a slightly different story... it either is, or it isn't. I'd point out that even so-called "professional" graders have been fooled by fakes before... PCGS at one point had to admit they slabbed several New Orleans Morgan dollars that turned out to be fakes made in the 1940's. It's not like the TPGs are infallible. If people who do it professionally can be fooled, so can anyone. However with education, you can get better at catching fakes. Anybody can do that, don't need to be in the business of authentication to catch a fake.

A really good counterfeit can even fool the TPGs. See my earlier comment about the fakes that got past PCGS. Conversely I can point to a thread here where I posted a genuine coin here that about 1/4 of the responders thought was fake. Anybody can make mistakes, and the TPGs are not immune. If I had $10,000 to spend on a coin I can also afford the same education that any grader from the TPGs have. (If you can afford coins that cost that much you'd be an idiot not to educate yourself before spending that kind of money!) Wouldn't guarantee I'd be able to catch it but I'd have at least as much a chance as they would. BTW I never said that authentication isn't worth paying for... I'll concede that much. It's professional grading that I think is a rip-off, because unlike authentication (a coin is either real, or it isn't), grading is purely subjective.

There's your assertion again that there's a "right" or "wrong" grade. TPGs are part of the problem here, not the solution... the belief that it can be firmly established what a coin's precise grade is and its value can be established because of that would not even exist if TPGs weren't around. BTW I think I probably could... but guess what, if I can't tell the difference between a coin worth $400 if it's EF 45 and $2200 if it's AU 50... I'm buying the EF 45! Paying an extra $1800 for a 5 point difference you can barely see is just plain idiotic and if nobody was willing to do that, the coin's value would drop at the higher grades for lack of demand. If TPGs didn't exist there wouldn't be the huge price difference between a given coin in say MS65 as in MS66, since there wouldn't be anyone to give a "professional" opinion that there's a signficant difference. Prices would be subjective and based on demand generated by the coin's eye appeal, not based on belief in someone's "professional" opinion of the grade.

TPGs are part of the problem, not part of the solution. I firmly believe that sending a single cent to a TPG for their opinion on a coin's grade, or paying a single cent more for a coin in a plastic holder with someone's grading opinion on it than you would for that same coin raw, is a complete waste of money. It's just an opinion, not a fact, and no amount of training or repetition makes any one person's opinion better than anyone else's. Certaintly doesn't make it worth paying for.

 

While theTPGs aren't perfect, I believe the hobby is better off with them than without them. The upside is authentication and an independent third party professional opinion as to grade. The downside is that it makes people lazy. I also believe it is partly responsible for coins being as high priced as they are. I don't think there would be such huge price differences between some MS64 and MS65 coins if not for the label on the slab making people overconfident about the grade and value. Another thing I like is that I think it will give my family a better chance of selling the coins for a fair price after I'm gone. It's very difficult for a non-collector to sell raw coins and not get ripped off.

 

Education is the key. You're right on that one and very few are quailifited to grade professionally. What most of us CAN learn without spending 95% of our lives doing is how to spot the "garbage" graders. This, it would seem, applies only to the true collectors. Fend for yourselves is what it boils down to.

Those that want to just "dump" money into coins to "invest" with no knowledge actaully do deserve to get burned. I know this is not my usual take on this but it's painfully true.

Garbage TPGs will continue to exist as long as there are idiots with money.

 

OK on that point we're just going to have to agree to disagree. I firmly believe that the TPGs have done far more harm than good and the hobby as a whole would be better off without them. But I can't say anything else that will cinvince somebody not willing to be convinced. The education that so-called "professional" graders have can be acquired by anyone who wants to take the time to do it. These graders would do the hobby a lot more good if they started writing books to share their knowledge rather than pretending that their subjective opinions are solid facts. They could probably even make as much money doing that as they could selling grading services, if the education is as hard and time consuming to gain as you claim.

That's all I can really say on the matter without repeating myself.

 

If your aim is to cut the price of coins DRASTICALLY, then do what you can to get rid of the TPG's. With out the TPG's, the internet market would virtually go away - at least for nice coins. A fair chink of the collectors would disappear. Then ther would be lots of coins for you.

 

Sounds good to me. It would certaintly eliminate those who buy coins as merely an investment from the hobby, thus lowering the prices for the true collectors who want to collect coins purely for the sake of doing so. However I doubt your assertion that the internet market would go away... nice coins speak for themselves and don't need a piece of plastic to be marketable. It would certaintly make questionable coins hard to sell... another good thing. So let's see... having the price of coins going down, eliminating pure investors and collectors who are unable or unwilling to educate themselves about the hobby, and having poor coins disappear from online venues... what exactly is the downside here? Sounds like the only losers in this scenario are those who can't or won't learn about coins on their own, coin investors who care little or nothing about collecting for its own sake, and of course the TPGs.

 

I'd be remiss if I didn't point out (again) those little plastic holders. As a former Purchasing Agent with years of procurement experience, I could knock those things off very easily and cost effectively- right down to the holographic decals. Honesty and integrity keep me from doing so. I'm too world weary and jaded to believe that every other person in the world operates on the same value system. I know from previous threads that counterfeit NGC slabs have already been detected. There could already be counterfeit slabs in circulation that have escaped detection. Given the financial incentive- I'd say it's an inevitability that unscrupulous individuals will keep on counterfeiting them until they succeed. The hobby will survive. If the TPG companies don't evolve quickly to meet this threat, they may not. This scenario may not fix the TPG system, but I feel it is destined to change it for better or worse.

Andy

 

my personal opinion is that when it comes to purchasing a key date for my morgan set, i want the authentication services of pcgs or ngc for piece of mind. i have taken counterfeit detection courses, but for something in which it is a large purchase (for me), i will trust the experts....steve

 

I know you are correct. I think education makes it more enjoyable and is critical for purchasing raw coins. But I generally trust the top tier TPGs and sometimes purchase slabs as an educational device. I try to see what they are seeing.

 

That is never a bad idea. I was given this piece of advice years ago and it does help.

Many of us have a decent idea on grading but since we are not "professionals" most will admit certain coins give them fits. For me it's Walking Liberty Halves, Franklin Halves and Peace Dollars.

Now I don't really collect these series' but a coin slabbed by a reputable TPG can be very helpful when I do see one I would consider buying.

 

As said, education is key.

Firm standards for tpgs to work to, while admittedly very unlikely to happen, would give them more credibility.

A factor not yet mentioned is that I believe the current grading scale is a big part of the problem. How many of the common hobbyists can function well with the 70 point system, espectiall in the MS grades where the big $$$ are involved? I believe that system was promoted by the powers that be (including the tpgs) in order to make money. Keeping the general hobby populace unable to effectively use the grading system generates an inherent need for someone else to do your grading for you. How convenient for a grading company for that to happen. I believe they can perform a valuable service as an authenticator, but all too often I think their services are used as a crutch due to a lack of knowledge, or as a method simply to generate higher profits for sellers/dealers. Personally, from what I have seen with tpg products (mostly NGC exonumia), I am rather disgusted with the poor quality of product (discussed in other threads).

Tied to the problem with the current grading system is that there is no shortage of buyers who will pay huge additional $$$ for a point or two higher grade, when that person could not tell the difference between the two, but is willing to do so solely because of someone else's opinion. I suppose it would be every salesman's dream that virtually every customer has been indoctrinated to believe every word they say is gospel, and the customer doesn't have the knowledge to refute anything presented by the salesman. I guess I can't really blame those who participate in that practice, and I'm sure that profit motive drives a fair portion of business to the tpgs. From strictly a collector standpoint though, I see it only as an opportunity to pay more for the same thing. Sometimes a lot more.

I also think tpg consistency is not up to a "professional" level. Coins get body bagged on one submission, but slabbed/graded the next. Coins get body bagged for reasons known not to be the case. Grades change from one submission to the next (ex: King of Siam set has "improved" with each submission). If the pros can frequently have trouble working with the system, how can the typical collector work with it? Perhaps a more workable and user friendly system would be good for the hobby, but I doubt the tpgs would endorse anything like that.

 

Good point. And a nice slabbed ef40 key date lincoln cent will be easier for my wife to sell when I'm gone then a raw coin of the same grade.

 

Started to agree with you but the government may be good at collecting taxes but the IRS is an extremly inefficient agency and the whole tax code is a total mess.

Thought about maybe NASA - NASA has done a lot and the space program research has provided a lot of everyday (Private industy) products we take for granted. However, throwing billions of dollars into a program and having good results does not equate to efficiency. I think private industry would have done a much better job and gone further than NASA given the resources.

So we are left with wasting money.

I don't think government is the salution for the TPG, but if they get involved they will become the problem.

 

NASA is, and has always been, a cooperative operation 'twixt the federal government and private industry. Much of the actual work has always been done by private contractors. It's as good as any government project can get... and overall, it's very very good. Obviously the world leader.

I strongly agree that it is absurd to even consider government regulation of TPGs. Such a notion is based on the mistaken assumption that the TPG industry is "broken" - which just isn't so.

If anything is broken, it's the raw coins portion of the hobby. There are far more shenannigans there than any top TPG. E-Bay proves that every day. Coin shows are only marginally better.

Currently, the only government interventions are court cases of outright fraud. Let's keep it that way.

 

WELL SAID :high5: